Lesson Tag: IND202AIA-AR

Video Time: 4:07

It depends on what temperature it needs to be stored at. If it needs to be stored at 38 degrees then most dry buildings can be retrofitted to store that. If it needs to be at negative 70 degrees, then that’s a totally different animal. Vaccines need to be stored at a wide variety of different temperatures.  The economics become difficult depending on how long we will need to hold vaccines and how low of temperatures they need to be held at.  

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Video Time: 5:07

 From an environmental and safety standpoint you might have an ammonia issue. That is a dangerous substance. There is also a risk, from an operational standpoint, that certain pieces of equipment might not work. ‘What happens when new systems come out and become more efficient?’ Although systems last for as long as 30 years, what happens when a new upgrade comes out that is more efficient than your equipment? The biggest risk is how can landlords backfill facilities once tenants leave? 

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Video Time: 8:52

A lot of it is land costs and a lot of it is availability of utilities. Not every piece of property is conducive to large power or sewer consumption.  As markets become hot, cold storage can afford to pay a bit more because the land is a smaller cost of the overall facility.  It’s similar, there’s just a bit more risk. The big difference from an investor standpoint is that dry is well known. The cold storage spec idea is no different than when investors were talking about doing spec industrial deals 5-10+ years ago.  Traditionally, the equipment will last for around 30 years. New systems now have smaller motors that you can replace parts on.  One of the important elements of cold storage buildings is the height. Because you can refrigerate a 50-foot-tall building for the same cost as you can refrigerate a 40-foot-tall building.  

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Video Time: 8:51

A lot of the existing cold storage assets are antiquated. There are low ceiling heights as well as inefficient equipment.  Demand is difficult to quantify.  There is actually shrinking supply. From 2015 to 2018 there was an 18 or 20% drop in inventory. Many times, cold storage facilities get converted to dry storage when equipment becomes antiquated.  All of the food coming through the supply chain is going through cold storage facilities.  From a COVID-19 standpoint, companies like Instacart and GoPuff are delivering directly to consumers from industrial cold storage warehouses. It is difficult to have all components (cold, dry and frozen) go directly to consumers. 

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Time of Video – 3:55 

With cold storage now representing a $98.1- billion market globally and compound annual growth of 12.1% projected through 2025, it’s safe to say this specialized subset of industrial has made its way into the spotlight. It’s also valid to ask whether a new real estate asset class is forming.  

Hear from industry experts regarding the increased demand for climate-controlled cold storage space that is not only weathering the pandemic but experiencing unprecedented growth due to consumer preferences towards fresh products and online grocery deliveries. 

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• The surge of interest in the cold storage space has been fueled by the growth in e-commerce and the online ordering of food. 
• Retrofitting an existing property to meet cold storage requirements can be nearly as costly as building from scratch.